Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - PARKER HANNIFIN CORP | d8k.htm |
| EX-99.1 - PRESS RELEASE ISSUED BY PARKER-HANNIFIN CORPORATION, DATED JANUARY 20, 2011 - PARKER HANNIFIN CORP | dex991.htm |
 Parker Hannifin
Corporation Quarterly Earnings Release
2
nd
Quarter FY2011
January 20, 2011
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Exhibit 99.2 |
| Slide 2
Forward-Looking Statements
Forward-Looking Statements:
Forward-looking statements contained in this and other written and oral reports
are made based on
known
events
and
circumstances
at
the
time
of
release,
and
as
such,
are
subject
in
the
future to unforeseen uncertainties and risks. All statements regarding future
performance, earnings projections, events or developments are
forward-looking statements. It is possible that the future performance
and earnings projections of the company, including its individual segments,
may differ materially from current expectations, depending on economic conditions
within its mobile, industrial and aerospace markets, and the company's ability to
maintain and achieve anticipated benefits associated with announced
realignment activities, strategic initiatives to improve operating margins,
actions taken to combat the effects of the current economic
environment,
and
growth,
innovation
and
global
diversification
initiatives.
A
change
in
economic conditions in individual markets may have a particularly volatile effect
on segment performance. Among other factors which may affect future
performance are: changes in business relationships with and purchases by or
from major customers, suppliers or distributors, including delays or
cancellations in shipments, disputes regarding contract terms or significant
changes
in
financial
condition,
and
changes
in
contract
cost
and
revenue
estimates
for
new
development programs; uncertainties surrounding timing, successful completion or
integration of acquisitions; ability to realize anticipated cost savings
from business realignment activities; threats associated with and efforts to
combat terrorism; uncertainties surrounding the ultimate resolution of
outstanding legal proceedings, including the outcome of any appeals; competitive
market conditions and resulting effects on sales and pricing; increases in raw
material costs that cannot be recovered in product pricing; the
company’s ability to manage costs related to insurance and employee
retirement and health care benefits; and global economic factors, including
manufacturing activity, air travel trends, currency exchange rates, difficulties entering
new markets and general economic conditions such as inflation, deflation, interest
rates and credit availability. The company makes these statements as of the
date of this disclosure, and undertakes no obligation to update them unless
otherwise required by law. |
| Slide 3
Non-GAAP Financial Measures
This presentation reconciles sales amounts reported in accordance
with U.S. GAAP to sales amounts adjusted to remove the effects of
acquisitions
made
within
the
prior
four
quarters
and
the
effects
of
currency exchange rates on sales. This presentation also reconciles
cash flow from operating activities as a percent of sales in accordance
with U.S. GAAP to cash flow from operating activities as a percent of
sales without the effect of a discretionary pension plan contribution.
The effects of acquisitions, currency exchange rates and the
discretionary pension plan contribution are removed to allow investors
and the company to meaningfully evaluate changes in sales and cash
flow from operating activities as a percent of sales on a comparable
basis from period to period. |
 Slide 4
Discussion Agenda
CEO 2
nd
Quarter Highlights
Key Performance Measures & Outlook
Questions & Answers
CEO Closing Comments |
 Slide 5
Second Quarter FY11 Highlights
End
Market
Improvement:
Orders
Improved
Year-over-Year
and
Sequentially for all Segments
Revenues
Rebounding:
Q2
Revenues
Increased
21.7%
Year-over-
Year
Operating
Margins:
Margins
Improved
Year-over-Year
for
all
Segments
Achieved All-time Record Margins across Q2 for:
–
NA Industrial, Total Industrial and Total Parker Operating Margins
Net
Income:
Q2
Net
Income
More
than
Doubled
Year-over-Year
Continued
Reduction
in
Leverage:
Gross
Debt
to
Total
Capital
Ratio Decreased to 26.5%
Continued
Strong
Cash
Flow:
Q2
FY11
Operating
Cash
Flow/Revenue of 10.0%
Acquisitions:
Completed
Acquisition
of
Gulf
Coast
Seal |
 Slide 6
Financial Highlights
Diluted Earnings per Share
2
nd
Quarter
$1.39
$.64
$2.90
$1.10
$.00
$.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
Q2 FY11
Q2 FY10
FY11
FY10 |
 Slide 7
Influences on 2
nd
Quarter Earnings
Diluted Earnings Per Share Increase of $.75 Year-
over-Year Primarily Driven By:
Increased Revenues of 21.7%
Improved Operating Income ($.71 EPS Impact)
Margins Improved to 14.0% from 10.4% Year-over-
Year
Lower Other Expense ($.07 EPS Impact)
Offset by:
Increased Corporate G&A Primarily Due To Incentives
($.03 EPS Impact) |
 Slide 8
Financial Highlights
Sales –
2
nd
Quarter
Dollars in millions
FY2011
%
Change
FY2010
FY2011
%
Change
FY2010
Sales
As reported
2,867
$
21.7 %
2,355
$
5,696
$
24.0 %
4,592
$
Acquisitions
10
0.4 %
14
0.3 %
Currency
(21)
(0.9)%
(47)
(1.0)%
Adjusted Sales
2,878
$
22.2 %
5,729
$
24.7 %
2nd Quarter
Total Year |
 Slide 9
Segment Reporting
Industrial North America
Dollars in millions
FY2011
%
Change
FY2010
FY2011
%
Change
FY2010
Sales
As reported
1,046
$
23.4 %
847
$
2,110
$
29.4 %
1,630
$
Acquisitions
4
0.5 %
4
0.2 %
Currency
5
0.5 %
8
0.5 %
Adjusted Sales
1,037
$
22.4 %
2,098
$
28.7 %
Operating Margin
As reported
159
$
114
$
349
$
191
$
% of Sales
15.2 %
13.5 %
16.5 %
11.7 %
2nd Quarter
Total Year |
 Slide 10
Segment Reporting
Industrial International
Dollars in millions
FY2011
%
Change
FY2010
FY2011
%
Change
FY2010
Sales
As reported
1,147
$
23.1 %
932
$
2,240
$
25.7 %
1,782
$
Acquisitions
1
0.1 %
1
0.1 %
Currency
(25)
(2.6)%
(52)
(2.9)%
Adjusted Sales
1,171
$
25.6 %
2,291
$
28.5 %
Operating Margin
As reported
168
$
83
$
352
$
144
$
% of Sales
14.6 %
8.9 %
15.7 %
8.1 %
2nd Quarter
Total Year |
 Slide 11
Segment Reporting
Aerospace
Dollars in millions
FY2011
%
Change
FY2010
FY2011
%
Change
FY2010
Sales
As reported
460
$
14.7 %
401
$
897
$
9.7 %
818
$
Acquisitions
1
0.2 %
3
0.4 %
Currency
(1)
(0.2)%
(2)
(0.2)%
Adjusted Sales
460
$
14.7 %
896
$
9.5 %
Operating Margin
As reported
64
$
41
$
107
$
94
$
% of Sales
13.8 %
10.2 %
12.0 %
11.5 %
2nd Quarter
Total Year |
 Slide 12
Segment Reporting
Climate & Industrial Controls
Dollars in millions
FY2011
%
Change
FY2010
FY2011
%
Change
FY2010
Sales
As reported
214
$
22.6 %
175
$
449
$
24.1 %
362
$
Acquisitions
4
2.2 %
6
1.3 %
Currency
0
(0.0)%
(1)
(0.0)%
Adjusted Sales
210
$
20.4 %
444
$
22.8 %
Operating Margin
As reported
10
$
6
$
31
$
17
$
% of Sales
4.4 %
3.5 %
6.9 %
4.6 %
2nd Quarter
Total Year |
 Slide 13
Parker Order Rates
Excludes Acquisitions & Currency
3-month year-over-year comparisons of total dollars, except Aerospace
Aerospace is calculated using a 12-month moving average
DEC '10
SEPT '10
DEC '09
SEPT '09
Total Parker
29 %
+
29 %
+
7 %
-
25 %
-
Industrial North America
26 %
+
31 %
+
3 %
-
27 %
-
Industrial International
29 %
+
34 %
+
0 %
+
25 %
-
Aerospace
37 %
+
16 %
+
27 %
-
23 %
-
Climate & Industrial Controls
26 %
+
23 %
+
6 %
+
17 %
-
Three Month Rolling at Period End |
 Slide 14
Balance Sheet Summary
Cash
Working capital
-
Accounts receivable
-
Inventory
-
Accounts payable |
 Slide 15
Strong Cash Flow
Cash from Operating Activities
2
nd
Quarter
FY11 Cash from Operating Activities
As
reported
$408
M
Pension
plan
contribution
200
M
Adjusted
$608
M
FY11 Cash from Operating Activities As A % of
Sales
As
reported
7.2%
Pension
plan
contribution
3.5%
Adjusted
10.7% |
 Slide 16
Financial Leverage
26.5%
16.0%
18.0%
20.0%
22.0%
24.0%
26.0%
28.0%
30.0%
32.0%
34.0%
36.0%
38.0%
40.0%
42.0%
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
Debt to Debt Equity
26.5%
Debt to Debt Equity |
 Slide 17
FY 2011 Earnings Outlook Assumptions
Segment Sales & Operating Margins
FY 2011 Sales change versus FY 2010
Industrial North America
19.8 %
--
21.8 %
Industrial International
18.6 %
--
20.6 %
Aerospace
6.7 %
--
8.7 %
Climate & Industrial Controls
14.6 %
--
15.6 %
FY 2011 Operating margin percentages
Industrial North America
16.2 %
--
16.8 %
Industrial International
15.1 %
--
15.7 %
Aerospace
13.6 %
--
13.9 %
Climate & Industrial Controls
8.3 %
--
8.8 % |
 Slide 18
FY 2011 Earnings Outlook Assumptions
below Operating Margin (+/-
1.0%)
Corporate Admin
$157M
Interest Expense
$ 98M
Other Expense (Inc.)
$133M
Total
$388M
Tax Rate
27% |
 Slide 19
Earnings Outlook –
FY11
Low
High
Diluted earnings per share
5.80
$
6.20
$ |
| Slide 20
Questions & Answers...
*
*
*
* |
 Appendix
Income Statement
2
nd
Quarter FY2011
1
st
Half FY2011
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*
*
* |
 Slide 22
Income Statement –
2
nd
Quarter
Dollars in millions
% of Sales
% of Sales
Net Sales
2,866.6
$
100.0 %
2,354.7
$
100.0 %
Cost of sales
2,195.7
76.6 %
1,869.5
79.4 %
Gross profit
670.9
23.4 %
485.2
20.6 %
S, G & A
345.7
12.1 %
309.8
13.2 %
Interest expense
25.6
.9 %
25.0
1.1 %
Other (income) expense, net
(6.6)
(.3)%
8.1
.3 %
Income before taxes
306.2
10.7 %
142.3
6.0 %
Income taxes
74.4
2.6 %
37.3
1.6 %
Net income
231.8
$
8.1 %
105.0
$
4.4 %
Less:
Noncontrolling
interests
1.6
$
.1 %
.4
$
.0 %
Net income attributable to common
shareholders
230.2
$
8.0 %
104.6
$
4.4 %
FY 2011
FY 2010 |
 Slide 23
Income Statement –
1
st
Half
Dollars in millions
% of Sales
% of Sales
Net Sales
5,695.9
$
100.0 %
4,591.9
100.0 %
Cost of sales
4,333.6
76.1 %
3,670.4
79.9 %
Gross profit
1,362.3
23.9 %
921.5
20.1 %
S, G & A
679.2
11.9 %
611.7
13.3 %
Interest expense
50.3
.9 %
50.8
1.1 %
Other (income) expense, net
(9.8)
(.2)%
2.7
.1 %
Income before taxes
642.6
11.3 %
256.3
5.6 %
Income taxes
161.8
2.8 %
77.3
1.7 %
Net income
480.9
$
8.5 %
179.0
$
3.9 %
Less: Noncontrolling
interests
3.5
$
.1 %
.9
$
.0 %
Net income attribituable
to common
shares
477.3
$
8.4 %
178.1
$
3.9 %
FY 2011
FY 2010
$ |